The race: Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA’s Anderson School of Management observed that such a surge of sales would not be likely in the absence of a widespread public belief that real estate prices were undergoing a steady drop. He added that while future price drops on the Westside of L.A cannot be ruled out, the profits would still not be as low as before.
Real estate prices in L.A are back to what they were in 2003, Gabriel said. According to DataQuick, a San Diego real estate information service, Southern California's median home price has fallen by 45% from where it peaked in 2007.
"L.A. real estate is a bargain compared to other major cities around the world," said Bret Parsons, an agent with John Aaroe Group.
The price(s): Southern California’s real estate market which has been in a dismal state for quite some time now is slowly reclaiming its grandeur. So far this year, at least a half a dozen Westside mega-estates have sold for more than $20 million taking the local realty circles by storm. Few other Southland counties can boast of such booming sales.
In the wings is Candy Spelling's magnificent "Manor," which has been commanding a listing price of $150-million in Holmsby Hills for more than two years. Last year’s $50-million Bel-Air sale is dwarfed in comparison to the “Larger than White House” Manor.
Why the race? Paul Habibi, a UCLA lecturer and real estate expert asserted that among the very wealthy, concerns about inflation fuel the frenzy of real estate purchases. “Putting excess cash into real estate can be a hedge against inflation”, he said.
He observed that the rich are good decision makers where finances are concerned.
Who wins? Big names, both international and local are participating in these deals of a lifetime.
Billy Rose, an agent with Rose & Chang, Beverly Hills opined that wealthy buyers are at a clear advantage of the new adjustments and are picking up trophy properties that are on sale only rarely.
Habibi suggested that $20-million sales generate enthusiasm, which is usually contagious. "Maybe they'll bring back what's left of consumer confidence”, he said.
In the long run though, customers, the real estate agencies and the market in general are expected to benefit from this surge in sales.